Joseph Percoco, Former Executive Aide And Campaign Manager To N.Y. Governor, Convicted Of Accepting More Than $300,000 In Bribes

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JOSEPH PERCOCO, the former Executive Deputy Secretary to the Governor of the State of New York, was convicted of soliciting and accepting more than $315,000 in bribes in return for taking official state action to benefit energy company Competitive Power Ventures (“CPV”) and Syracuse-based real estate developer COR Development (“COR”) after an eight-week trial. STEVEN AIELLO, a COR executive, was also convicted of bribery conspiracy.

U.S. Attorney Geoff Berman said: “Joseph Percoco was found guilty of taking over $300,000 in cash bribes by selling something priceless that was not his to sell – the sacred obligation to honestly and faithfully serve the citizens of New York. As every schoolchild knows, but he corruptly chose to disregard, government officials who sell their influence to select insiders violate the basic tenets of a democracy. We will continue relentlessly to bring to justice those public officials who violate their oaths by engaging in this especially offensive misconduct.”

According to the evidence introduced at trial, other proceedings in this case, and documents previously filed in Manhattan federal court:

PERCOCO, who served as the Executive Deputy Secretary to the Governor between January 2012 and mid-2014, and again in 2015, abused his official position and extensive influence within the Executive Branch of New York State (the “State”) by seeking and accepting bribe payments from executives at companies that were seeking benefits and business from the State, in exchange for PERCOCO’s use of his official authority and influence to benefit those companies.

PERCOCO solicited the bribe payments from executives at two clients of cooperating witness Todd Howe – CPV and COR – both of which had retained Howe as a consultant to help them obtain official State action. In email correspondence between PERCOCO and Howe, PERCOCO and Howe referred to the bribe payments as “ziti,” a reference to a term for money used by the characters in the television show “The Sopranos.”

Bribes from CPV

PERCOCO, Howe, and others conspired for PERCOCO to receive more than $287,000 in bribe payments in exchange for PERCOCO’s official assistance for CPV on an as-needed basis.

State action was critical to CPV’s business. Starting as early as 2010, CPV provided personal benefits to PERCOCO, including expensive meals and a Hamptons fishing trip, in an effort to cultivate access to PERCOCO. In response to CPV’s requests for official State assistance, PERCOCO, who was experiencing financial difficulties at the time, requested that CPV hire his then-unemployed wife. In or around the end of 2012, CPV executive Peter Galbraith Kelly Jr. created a position for PERCOCO’s wife that paid approximately $90,000 per year while requiring PERCOCO’s wife to do little work. In exchange for these payments, PERCOCO agreed to use his official position and influence, and did in fact use his official position and influence, to help CPV with specific State matters as the opportunities arose.

Among other things, PERCOCO agreed to use his official position and influence to assist the CPV’s efforts to obtain (i) a valuable agreement from the State allowing CPV to buy lower-cost emissions credits in New York for a power plant proposed to be built in New Jersey and (ii) a lucrative long-term power purchase agreement with the State guaranteeing a buyer for the power to be produced at a power plant proposed to be built in New York, which was expected to save CPV approximately $100 million in development costs.

CPV’s payments to PERCOCO’s wife were concealed in various ways to hide their true source. For example, monthly payments to PERCOCO and his wife were made through a consultant who worked for CPV in order to disguise the source of the payments. For his part, PERCOCO concealed the criminal scheme by failing to include CPV as the source of payments on his State-mandated financial disclosure forms.

Bribes from AIELLO and the Syracuse Developer

Beginning in early 2014, PERCOCO was also paid bribes totaling approximately $35,000 from COR. These bribe payments were orchestrated by AIELLO, the COR president. AIELLO arranged for the payment of these bribes in exchange for PERCOCO’s official assistance for COR on an as-needed basis.

Specifically, PERCOCO agreed to, and did, take official action for the benefit of COR to (a) reverse an adverse decision by the Empire State Development Corporation, which is the State’s main economic development agency, that would have required COR to enter into a costly labor peace agreement, (b) free up a backlog of more than $14 million in State funds that had already been awarded to COR but were delayed in payment, and (c) secure a substantial pay raise for AIELLO’s son, who worked in the Executive Chamber.

To disguise the nature and source of the bribe payments, COR’s bribes to PERCOCO were funneled through bank accounts and a shell company set up by Howe.

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The jury was deadlocked on the charges against Kelly. Joseph Gerardi, a COR executive, was acquitted of all charges.

PERCOCO is scheduled to be sentenced on June 11, 2018, and AIELLO is scheduled to be sentenced on June 14, 2018. Both defendants will be sentenced by U.S. District Judge Valerie E. Caproni, who presided over the trial.

A chart containing the names, ages, residences, counts of conviction, and maximum penalties for the defendants is attached. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

U.S. Attorney Berman praised the work of the Buffalo Field Office of the Federal Bureau of Investigation and New York Office of the Internal Revenue Service-Criminal Investigation, which jointly conducted this investigation with investigators from the U.S. Attorney’s Office. Mr. Berman also thanked the New York State Attorney General’s Office.

This case is being prosecuted by the Office’s Public Corruption Unit. Assistant U.S. Attorneys Janis Echenberg, Robert Boone, David Zhou, and Matthew Podolsky are in charge of the prosecution; paralegal specialists Sylvia Lee and Aashna Rao provided additional support.